Crystal Cathedral to be sold to pay off debt, emerge from bankruptcy

The Crystal Cathedral campus, a longstanding landmark in Orange County, will be sold as a method of exiting bankruptcy and reconciling millions in debt, church officials said today.

The Garden Grove church, which said it owed more than $50 million to creditors and vendors when it filed for Chapter 11 bankruptcy protection in October, will file a reorganization plan with a Santa Ana court as soon as Friday.

"It’s great news," said church spokesman John Charles. "It gives us the opportunity to pay everybody off and start fresh."

The plan includes the sale of the 40-acre campus to a real estate investment group, alleviating financial pressure from a $36-million mortgage, Charles said.

The church has a guaranteed option of leasing the campus for 15 years. After four years, the church could buy back the core buildings, which include the 10,000-pane Crystal Cathedral, the 13-story Tower of Hope, the welcome center and the cemetery.

The only building the church cannot buy back is the Family Life Center, the four-story office building on the campus, said Marc Winthrop, a bankruptcy lawyer for the church. The Family Life Center is already for sale.

The plan, which could be approved at a June 1 hearing, will allow the cathedral to repay more than 550 creditors in the next 42 months. Winthrop would not reveal the identity of the real investment group, or give further details.

The church has been the subject of controversy in recent months, after financial documents related to the case revealed generous pay and tax allowances for cathedral officials. Then, in March, choir members were outraged after they were asked to sign a sex covenant some perceived as anti-gay.

The church’s reputation also suffered after founder Robert H. Schuller stepped down from the pulpit and handed the reins to his son, Robert Anthony Schuller. But by the fall of 2008, discord prompted the younger Schuller to resign. Sheila Schuller Coleman, the founder's daughter, stepped up to the senior pastor position in 2009, but has not been fully embraced by the congregation.

"We are pleased that we are able to honor the debt that we have incurred and to honor the creditors who are due their payment," Schuller Coleman said in a statement. "We are thankful to the vendors for their patience and we are so sorry for any pain that they have incurred. To pay them back 100% has always been a top priority and we are grateful to God for providing the resources to be able to do just that."

Local worship services and community outreach programs will not be affected by the plan, which church officials are hailing as the first step in getting the church on solid financial footing to "launch forward with a bold new vision from Pastor Sheila."

Charles declined to say what the bold new vision would be.

Paul Laredo, who was an orchestra member for 25 years, said no matter what, the damage has been done to the church’s reputation. The church still owes him about $1,500 for past performances.

Church leaders "could make a couple steps forward, but they've made so many steps backward that I don't see that happening," he said.

[For the Record, 8:10 a.m. May 27: A previous version of this post said that after founder Robert H. Schuller stepped down in 2006, his son, Robert Anthony Schuller, did not replace him.]